Moody's rates Ensign Drilling notes B2

Moody's Investors Service said it assigned a B1 corporate family rating and B1-PD probability of default rating to Ensign Drilling Inc., along with a SGL-2 speculative grade liquidity rating and B2 (LGD 5) senior unsecured rating to the proposed $700 million notes issue.

The outlook is stable.

Ensign Drilling is a wholly owned subsidiary of publicly traded Ensign Energy Services Inc., Moody's said.

The agency said it relies on the financials of Ensign, the guarantor of the senior unsecured notes, to monitor the ratings of Ensign Drilling.

The proceeds from the proposed notes offering will be used to refinance existing indebtedness and pay related fees and expenses, Moody's said.

The ratings benefit from a solid debt-to-EBITDA ratio that will be less than 3.5x in 2019 and 2020, along with a strong track record of solid leverage, the agency said.

The ratings are challenged by only about a third of rigs under contracts for more than six months, exposure to the cyclical drilling market and high revolver utilization, Moody's said.

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